The extended period of limitation cannot be invoked when the department is aware of the relationship between the parties and the transaction is revenue neutral, as such circumstances negate the intent to evade duty.

PER : P. A. AUGUSTIAN

The issue in the present appeal is regarding valuation of Ingots manufactured by the Appellant.

2. The brief facts are the Appellant is manufacturing M.S. Ingots and alleging that the Appellant had sold the M.S. Ingots manufactured by them during the period from 2010-11 to 2012-13 without following the Central Excise Valuation (Determination of Price of Excisable Goods) Valuation Rules, 2000 to their sister concern, proceedings were initiated and show cause notice was issued on 28.04.2015 and Adjudication authority as per the Order-in-Original dated 31.03.2017 confirmed the demand along with interest and also imposed penalty. Aggrieved by said order, an appeal was filed before the Commissioner (Appeals) and Commissioner (Appeals) as per the order dated 15.11.2019 rejected the appeal and aggrieved by said order, present appeal is filed.

3. When the appeal came up for hearing, Learned Consultant for the Appellant submits that the demand as per the impugned order is unsustainable on the ground of limitation as well as on merit also. As regards the demand on merit, Learned Consultant submits that entire allegation is made on the ground that M/s. Surabhi Steels Rolling Mills Pvt. Ltd., and the Appellant are related persons in terms of Section 4(3)(b)(i) read with Explanation (i)(C)(III) there under of the Act and as defined in the MRTP Act, 1969 . Appellant had manufactured and cleared excisable goods, namely, M.S Ingots, to M/s. Surabhi Steel Rolling Mills Private Ltd, for use in the manufacture of other articles. But though the assessee had paid duty on the said goods cleared, alleging that the value adopted for payment of the duty was not determined as per the provisions under Rule 8 read with Rule 9 of Central Excise Valuation Rules, 2000 and that there was short payment of duty on this account during the period 01.04.2010 to 31.03.2013. Hence the value of excisable goods cleared by the appellant to M/s Surabhi Steel Rolling Mills Pvt. Ltd. during the said period could not be determined under Rule 1 to Rule 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Valuation Rules, 2000. As such, the value had to be determined as per Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 using reasonable means consistent with the principles and general provisions of the said rules and Section 4(1)(b) of the Act, based on the details contained in the ER-1 Return filed by the appellant for the period April 2013 to June 2014. The assessable value declared in the relevant ER-1 returns was taken as the cost of production for the purpose of ascertaining the value under Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Valuation Rules, 2000. In this regard, Learned Consultant submits that the issue is revenue neutral. Both the units are owned and managed by the same management. Whatever duty paid by the appellants is available as cenvat credit to the other unit and the entire exercise is revenue neutral.

4. As regards limitation, learned consultant submits that the show cause notice was issued on 28.04.2015 for the period 01.04.2010 to 31.03.2014. The status of the relationship between the appellants and their sister concern was known to the department right from the establishment of the factories in 1995 as all the ownership details were disclosed while obtaining central excise registration for both the units. Also, both the factories are in adjacent plots. Further, the officers of the department had been visiting both the units for official purposes and ha